NFA Questions CFTC Proposal on Direct Clearing by Customers

NFA questioned the "proposed methodology" of a CFTC proposal that would apply to direct clearing of transactions by customers not intermediated through an FCM. (See related coverage.)

In comments on the CFTC's proposed rulemaking governing the protection of clearing member proprietary funds held at a derivatives clearing organization ("DCO"), NFA said that the protections afforded to retail customers, who clear their transactions directly, were significantly less than those clearing through an FCM.

NFA argued "that [the CFTC] proposal inadvertently creates a false impression that retail clearing members are receiving all appropriate customer protection..." NFA further asserted that clearing organizations providing direct clearing to customers were engaged in activities neither contemplated by the CEA nor covered by the CFTC's DCO regulations.